Small businesses in London impacted by high cost burden
30 Oct 2013
A recent report, the Small Business Cities Index, reviewing top European, American and Far Eastern cities on a broad range of attributes, identified that London falls behind other cities in relation to the costs burden on small businesses.
In the report delivered by London First & Federation of Small Businesses (FSB), London was assessed as having good access to global markets, good business and employment regulations, and access to a highly skilled workforce. But the findings also showed that London has a high cost base compared to other cities, challenges with its infrastructure, and is only ranked mid-table in terms of access to finance.
Infrastructure included both the access to broadband and mobile phone networks, but also good electricity and transport infrastructure.
As the index was weighted towards the costs burden (33%), London ended up in the bottom end of the range within the Cities Index. However, if that factor is removed, London would still have comparative improvements to make to break from mid-table position:
• Some technological improvements such as ultra high speed broadband (Google Fiber), the expansion of 4G, and then 5G mobile phone networks, as well as better and more reliable electricity power sources would greatly assist.
• More could be done to encourage low cost residential housing, as well as hubs of business start up lower cost centres (with reduction of business rates) within London.
• Continued improvements to city transport networks are essential; where example cities such as Copenhagen lead the way.
• Better access to funding for growth should encourage the current peer-to-peer lending innovations, as well as further encouraging business angel networks through tax incentivising investment in new start ups.
Matthew Burge, Beavis Morgan Client Partner, comments: “Traditional banks have a huge role to play in improving access to funding, and there are encouraging signs that some banks are returning to sensible, traditional, yet innovative solutions to help fund businesses.
“It is also apparent that many SMEs are using alternative methods of gaining this much needed funding. However, the continuous increase in business rates is putting pressure on cashflow, with the FSB calling for a review of the model and a freeze in business rates for the next financial year.”
Beavis Morgan is the specialist accounting, tax, restructuring and advisory firm for owner-managed businesses, professional firms, landed estates and high net worth individuals. We work at understanding our clients and their individual requirements, and we pride ourselves on finding the right solutions and providing quality, tailored advice, helping them achieve business performance excellence … and protect and increase their net worth. Our head office is located within the heart of London, where we help our clients expand and develop their businesses and realise their ambitions within the increasingly complex global economy.
Source: London First & the Federation of Small Businesses: The Small Business Cities Index 2013